1. Financial Results:

Despite volatile oil markets and crude oil prices, your Company has earned a Net Profit of Rs. 161,263 million (down 3.45% from Rs. 167,016 million in 2007-08).

During the year under review, your Company registered a gross revenue of Rs. 650,494 million, (up 5.7 % from Rs. 615,426 million in 2007-08), despite sharing under recoveries of Rs. 282,252 million (Rs. 220,009 million in 2007-08), of the Public Sector Oil Marketing Companies by way of discounts in the price of Crude Oil, Domestic LPG and PDS Kerosene, on administrative instructions of the Ministry of Petroleum & Natural Gas, Government of India.

1.1 Highlights:

* Sales Revenue: Rs. 639,682 million

* Profit after Tax (PAT): Rs. 161,263 million

* Contribution to Exchequer: Rs. 280,496 million (ONGC's contribution to Central and State Government by way of Cess, Royalty, duties, taxes and Dividend on Central Government Shareholding).

* Return on Capital Employed 49.9%

* Debt-Equity Ratio 0.0003:1

* Earning Per Share (Rs.) 75.40

* Book Value Per Share (Rs.) 365

Financial Results (Rs. in million)2008-09 2007-08

Gross Revenue 650,494 615,426

Gross Profit 377,331 351,912

Less:

Interest 1,190 590

Exchange Variation 3,819 (1,070)

Depreciation 14,491 14,060

Amortisation 67,320 47,580

Depletion 42,148 36,776

Impairment (3,110) (437)

Provision/Write Ofts 11,666 2,067

Provision for Taxation (including 78.544 216,068 85,330 184,896

deferred tax liability of Rs.4,314 million)

Net Profit After Tax 161.263 167.016

Appropriations:

Interim Dividend 38,500 38,500

Proposed Final Dividend 29,944 29,944

Tax on Dividend 11,632 11,632

Transfer to General Reserve 81,187 86,940

Total 161,263 167,016

2. Dividend:

Your Company had paid an Interim Dividend of Rs. 18 per share (180%) in December, 2008 The Board of Directors has now recommended a final dividend of Rs.14 per share (140%) making the aggregate dividend at Rs. 32 per share (320%), same as previous year's Rs.32 per share (320%). The total dividend will absorb Rs. 68,444 million, besides Rs 11,632 million as tax on dividend.

3. Production & Sales:

Highlights of production and sales of Crude Oil, Natural Gas and Value-added Products:

Unit Production Sales Value (Rs. In million)2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

DIRECT:

CRUDE OIL (MMT) * 27.13 * 27.93 22.88 24.08 391,907 386,803

NATURAL GAS (BCM) ** 25.43 ** 25.12 20.53 20.43 75,528 71,780

C2-C3 000 MT 497 520 497 520 9,889 9,291

LPG 000 MT 1026 1035 1029 1037 22,752 20,169

NAPHTHA 000 MT 1553 1469 1545 1442 48,406 43,848

SKO 000 MT 156 167 153 168 4,448 3,374

OTHERS 1,554 937

SUB TOTAL 554,484 536,202

TRADING:

MOTOR SPIRIT 000 KL 273 232 11,062 9,159

SKO 000 KL 441 308 12,253 7,401

HSD 000 KL 1742 1539 61,883 48,608

SUBTOTAL 85,198 65,168

GRAND TOTAL 639,682 601,370

* includes 1.76 MMT (Previous year 1.99 MMT) from Joint Ventures. ** includes 2.95 BCM (Previous year 2.79 BCM) from Joint Ventures.

4. Oil & Gas Reserves:

ONGC has made voluntary disclosures in respect of Oil & Gas Reserves, conforming to SPE classification 1994 and US Financial Accounting Standards Board (FASB-69). ONGC, along with it's group Companies, has added 206.80 MTOE of ultimate reserves of O+OEG during the year under review from its domestic and overseas assets (OVL).

Ultimate Reserve (3P) accretion O+OEG (in MTOE)Year Domestic Domestic Total Foreign TotalAssets JVs (ONGC's Domestic Assets (5)=(3)+(4)share) Reserve (OVL's Share) (1) (2) (3)=(1)+(2) (4)

2006-07 65.56 4.77 70.33 9.96 80.292007-08 63.82 -0.34 63.48 46.73 110.212008-09 68.90 2.82 71.72 135.08 206.80

5. Statement of Reserve Recognition Accounting:

1. The Concept of Reserve Recognition Accounting attempts to recognize income at the point of discovery of reserves, and seeks to demonstrate the intrinsic strength of an organization with reference to its future earning capacity in terms of current prices for income as well as expenditure. This information is based on the estimated net proved reserves (developed and undeveloped) as determined by the Reserves Estimates Committee.

2. As per FASB-69 on disclosure about Oil and Gas producing activities, publicly traded enterprises that have significant Oil and Gas producing activities are to disclose with complete set of annual financial statements, the following information, considered to be supplemental information:

a) Proved Oil and Gas reserve quantities.

b) Capitalized costs relating to Oil and Gas producing activities.

c) Cost incurred for property acquisition, exploration and development activities.

d) Results of operations for Oil and Gas producing activities.

e) A standardized measure of discounted future net cash flows relating to proved Oil and Gas reserve quantities.

3. Your Company has disclosed information in respect of (a) and (d) above in the Annual Financial Statements.

In respect of item (e) above, your Company has made voluntary disclosure on standardized measure of discounted future net cash flows relating to proved Oil and Gas reserves at Annexure-A.

6. Financial Accounting:

The Financial Statements have been prepared in accordance with the Generally Accepted Accouptinc Principles (GAAP) and in compliance with all app Accounting Standards (AS-1 to AS-29) and Success! Efforts Method as per the Guidance Note on Accountirs. for Oil & Gas Producing Activities issued by The Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act, 1956.

7. Internal Control System:

The Company has well established and efficient internal control system and procedures. Your Company has already implemented SAP R/3 system for integration of various business processes across the organization. The system has now been upgraded from earlier version of SAP 4.6C to ECC 6.0. The Company also has well defined financial powers of various executives in its Book of Delegated Powers. The Book of Delegated Powers (BDP) has recently been revised to bring further delegation. The Company has in-house Internal Audit Department commensurate with its size. Audit observations are periodically reviewed by the Audit & Ethics Committee of the Board and necessary directions are issued wherever required.

8. Subsidiaries:

(i) ONGC Videsh Limited (OVL):

ONGC Videsh Limited (OVL), the wholly-owned subsidiary of your Company for overseas E&P activities, registered significant performance during 2008-09. It acquired 7 E&P projects in 5 countries during the year. The company presently has participation in 40 projects in 16 countries. Among newly acquired projects, San Cristobal Project in Venezuela and Imperial Energy in Russia, are under production phase; Block BM-Seal-4 and Block BM-Bar-1 in Brazil, Block CPO-5 and Block SSJN-7 in Colombia are under exploration phase. An exploration block AD-7 in Myanmar in which OVL acquired 20% during the year was surrendered after completion of the study phase.

Out of 40 projects, OVL is operator in 17 projects and joint operator in 5 projects. OVL is currently producing oil and gas from Greater Nile Oil Project and Block 5A in Sudan, Block 06.1 in Vietnam, Al Furat Project in Syria, Sakhalin-I Project and Imperial Energy in Russia, Mansarovar Energy Project in Colombia and San Cristobal Project in Venezuela. Block BC-10 in Brazil has commenced production from 13th July 2009. Block A-1 and A-3 in Myanmar, North Ramadan Block and NEMED Project in Egypt and Farsi Offshore Block in Iran have discoveries and appraisal work is being carried out. The remaining projects are in exploration phase.

During 2008-09, OVL's share in production of oil and oil-equivalent gas (O+OEG), together with its wholly-owned subsidiaries ONGC Nile Ganga B.V., ONGC Amazon Alaknanda Limited and Imperial Energy, was 8.78 MTOE of O+OEG as against 8.80 MTOE of O + OEG during 2007-08.

OVL's consolidated gross revenue increased by 9.27%, from Rs. 169,342 million during 2007-08 to Rs. 185,035 million during 2008-09, and consolidated net profit increased by 17.09% from Rs. 23,971 million during

2007-08 to Rs.28,067 million, during 2008-09.

Direct Subsidiaries of OVL:

a) ONGC Nile Ganga B.V.(ONGBV):

ONGC Nile Ganga B.V. (ONGBV), a subsidiary of OVL, is engaged in E&P activities in Sudan, Syria, Venezuela and Brazil.

* ONGBV holds 25% Participating Interest (PI) in Greater Nile Oil Project (GNOP), Sudan with its share of oil production of about 2.443 MMT during 2008-09.

* ONGBV holds 16.66% to 18.75% PI in four Production Sharing Contracts in Al Furat Project (AFPC), Syria with its share of oil production of about 0.812 MMT during 2008-09.

* ONGBV also holds 40% PI in San Cristobal Project in Venezuela through its subsidiary company ONGC Nile Ganga (San Cristobal) B.V. with its share of oil production of about 0.671 MMT during 2008-09.

* Further ONGBV has 15% PI in BC-10 Project in Offshore Brazil which is scheduled to commence production in 2009-10.

* ONGBV is also 100% operator of exploratory blocks BM-S-73 and BM-ES-42 and holds 25% PI in exploratory blocks Block BM-SEAL-4 and Block BM-BAR-1 all located in Deepwater Offshore, Brazil.

b) ONGC Narmada Limited(ONL):

ONGC Narmada Limited (ONL), a wholly-owned subsidiary of OVL is engaged in E&P activities in Nigeria. ONL holds 13.5% PI in deep water exploration Block-2 in Nigeria-Sao Tome & Principe, Joint Development Zone (JDZ). The Chinese NOC, Sinopec is operator with 28.67% PI.

c) ONGC Amazon Alaknanda Limited (OAAL):

ONGC Amazon Alaknanda Limited (OAAL), a wholly-owned subsidiary of OVL incorporated in Bermuda, holds stake in E&P projects in Colombia, through Mansarovar Energy Colombia Limited (MECL). a 50:50 joint venture company with Sinopec of China. During 2008-09, OVL's share of production was about 0.370 MMT of oil.

d) Jarpeno Limited:

Jarpeno Limited, a wholly-owned subsidiary of OVL incorporated in Cyprus, acquired Imperial Energy Corporation pic, a UK listed upstream oil exploration and production entity with its main activities in Tomsk region of Western Siberia in Russia, in January 2009. During 2008-09, Jarpeno's production was about 0.076 MMT of oil.

Joint Venture of OVL:

e) ONGC Mittal Energy Limited (OMEL):

OVL along with Mittal Investments Sari (MIS) promoted ONGC Mittal Energy Limited (OMEL), a joint venture company incorporated in Cyprus. OVL and MIS hold 98% equity shares of OMEL in the ratio of 51 (OVL): 49(MIS) with 2%

shares held by SBI Capital Markets Ltd. OMEL holds 45.5% and 64.33% PI in exploration Blocks OPL 279 and OPL 285 respectively in Nigeria. OMEL also holds 45% Class-C shares in ONGBV exclusively for AFPC Syrian Assets; such investment being financed by Class-C Preference Shares issued by OMEL in the ratio of 51:49 to OVL and MIS respectively.

(ii) Mangalore Refinery & Petrochemicals Limited (MRPL):

Your Company continues to hold 71.62% equity stake in MRPL, which has achieved new heights in excellence in both financial and operational performance during the year.

Highlights:

* Highest-ever Refinery crude thruput at 12.59 MMT;

* Highest-ever Turnover at Rs 427,190 million;

* Highest-ever Profit before Tax of Rs. 18,120 million;

Keeping the Project investment in view, a dividend of 12% has been recommended.

MRPL Refinery was awarded 'Oil & Gas Conservation Award - 2008' for Furnace and Boiler Insulation Effectiveness and Efficiency' instituted by Centre for High Technology (CHT), Govt, of India. It has also been awarded 'Energy Efficiency Unit Award' for excellence in energy management 2008 under refinery category, instituted by Confederation of Indian Industries (CM).

MRPL continues to be a major exporter of petroleum products with exports valuing Rs. 116,080 million during 2008-09 compared to Rs. 112,320 million during the previous fiscal. It continues to retain its market leader position with respect to sale of Bitumen in its refinery zone. MRPL has been awarded Best Exporter Award (Gold) - 2008, by Federation of Kamataka Chamber of Commerce and Industry (FKCCI).

The joint venture of MRPL and Shell Gas B.V., Netherland 'Shell MRPL Aviation Fuel and Services Private Limited' for marketing of Aviation Turbine Fuel (ATF) to both Domestic and International airlines at Indian Airports commenced its operations in August 2008 at Bengaluru Airport and is progressing satisfactorily, achieving sales volume of 35,517 kl during 2008-09. The volumes are likely to grow with commencement of operations at Hyderabad Airport recently. The company has also secured contracting commission (CONCO) business of Air India, Kingfisher and Deccan Cargo at several international Airports like Dubai, Hong Kong etc.

Direct Marketing:

As on date, MRPL is only operating one retail outlet, under its HiQ brand and its second retail outlet has been recently commissioned in April, 2009.

MRPL's Phase III Refinery Project is progressing as per schedule.

9. Exemption in respect of Annual Report of Subsidiaries and Consolidated Financial Statement:

In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copies of the Balance Sheets, Profit and Loss

Accounts, Report of the Board of the Directors and Reports of the Auditors of the Subsidiary Companies have not been attached to the Accounts of the Company. The Company will make these documents/details available upon request by any member of the Company interested in obtaining the same. Annual Reports of MRPL and OVL are available on website www.mrpl.co.in and www.ongcvidesh.com respectively.

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates and with Accounting Standard AS-27 on Financial Reporting of Interests in Joint Ventures, Audited Consolidated Financial Statements for the year ended 31.03.2009 of the Company and its subsidiaries form part of the Annual Report and Accounts.

10. Joint Ventures/Associates:

(i) Petronet LNG Ltd. (PLL):

ONGC has 12.5% equity stake in PLL. PLL has started commissioning of Dahej LNG terminal to 10.0 MMTPA capacity and also commenced construction of LNG Receiving and Re-gasification Terminal of 5.0 MMTPA at Kochi. The turnover of PLL during 2008-09 is Rs. 84,287 million (previous year Rs. 65,553 million) and net profit is Rs. 5,184 million (previous year Rs. 4,747 million). PLL has declared a dividend of 17.5% (previous year 15%).

(ii) Pawan Hans Helicopters Ltd. (PHHL):

ONGC, has 21.5% equity stake in PHHL, which provides helicopter support for its offshore operations. PHHL is one of Asia's largest helicopter operators having a well balanced operational fleet of 36 helicopters. PHHL was successful in providing all the 12 Dauphin N & N3 helicopters fully compliant with AS-4 as per the new contract with ONGC. The net profit of PHHL for the year 2007-08 is Rs. 231.7 million (previous year Rs.95.2 million) and it has recommended a dividend of 10%.

(iii) Petronet MHB Ltd (PMHBL):

Petronet MHB Ltd is a JV Pipeline Company of ONGC (28.766% equity), HPCL (28.766%) and PIL (7.898%) and balance equity by banks. This JV company transports MRPL Products to hinterland of Kamataka. Maintaining its turnaround trend the company, as per unaudited results in FY 2008-09, has made a net profit of Rs. 78.1 million (Before Tax) on a throughput of 2.452 MMT against Net profit of Rs. 3.8 million with throughput of 2.14 MMT in FY 2007-08.

(iv) ONGC Tripura Power Company Ltd. (OTPC):

Your company has promoted 'ONGC Tripura Power Company Ltd.' with envisaged equity stake of 50% along with Govt of Tripura (0.5%) and IL&FS (26%) to set-up 726.6 MW (363.3x2) gas based Combined Cycle Power Plant (CCPP) at Pallatana, Udaipur in Tripura to monetize its idle gas assets in Tripura state. Generation EPC contract has been awarded to BHEL for supply and commissioning of two CCGT units. Various linkages like gas supply by ONGC and power off-take by NE states have been finalized. Process of financial closure is in progress.

(v) Dahej SEZ Ltd. (DSL):

Your company with 23% equity stake along with Gujarat Industrial Development Corporation (26%) is developing a multi-product SEZ at Dahej in coastal Gujarat over 1717 hectares of land through a SPV 'Dahej Special Economic Zone Ltd'. SEZ has formatly been approved by Ministry of Commerce & Industry and Gazette notification issued. Torrent Energy Limited (TEL) has been appointed as Co-Developer for Power generation, transmission and distribution network in Dahej SEZ. LOI awarded for infrastructure development job. About 80% of the saleable land has already been allotted to prospective unit holders and allotment of remaining land is in final stages.

(vi) ONGC Petro-additions Ltd. (OPaL):

Your company is promoting a JV company 'ONGC Petro-additions Limited' (OPaL) with 26% equity stake along with GSPC (5%) and GAIL (19%) to implement a mega petrochemical complex comprising of 1.1 MMTPA Ethylene Cracker and global scale polymer units within Dahej SEZ as a step towards downstream integration. OPaL has awarded a Rs. 68,000 million (US$ 1.43 billion) contract to a consortium of Samsung Engineering (Korea) and Linde AG (Germany) for engineering, procurement, construction & commissioning of a Naphtha and Dual-feed Ethylene cracker plant.

(vii) Mangalore Special Economic Zone Ltd (MSEZ):

Your company with 26% equity stake along with KIADB (23%) and IL&FS+KCCI (51%) is promoting another SEZ in coastal Mangalore. Ministry of Commerce & Industry has formally notified to set up a Petro-chemical Specific SEZ in 1,453 acres of land. Resettlement & Rehabilitation work of Project Displaced People is in progress over 136 acres of land. MSEZ has allotted requisite land to MRPLfor refinery expansion, ONGC Mangalore Petrochemical Ltd (OMPL) for setting up the petrochemical units and ISPRL for strategic crude reserves.

(viii) ONGC Mangalore Petrochemicals Ltd (OMPL).

Your company is also promoting another JV company 'ONGC Mangalore Petrochemicals Limited' (OMPL) with 46% equity participation, along with MRPL (3%) for setting up manufacturing facilities for 0.92 MMTPA Para-Xylene and 0.14 MMTPA Benzene from MRPL's aromatic streams in Mangalore SEZ as value addition project. OMPL has engaged PMC & major technology licensors and Site infrastructure development has commenced. Exemption of duties and taxes has been obtained from Mangalore SEZ Development Commissioner.

(ix) ONGC TERI Biotech Ltd. (OTBL):

ONGC formed a Joint Venture in association with The Energy Research Institute (TERI) for addressing the requirement of Bioremediation, Microbial Enhanced Oil Recovery and prevention of wax deposition in tubulars for its E&P operations. The JV was incorporated on 26th March, 2007.

11. Other Projects / Business initiatives:

(a) C2-C3 - C4 Extraction Plant;

ONGC is setting up a C2-C3-C4 Extraction Plant at Dahej using LNG from PLL as feed stock. The plant is nearing mechanical completion with Overall

progress of 97.53% as on 31st March, 2009.

(b) Memorandum of Understandings (MOUs):

1. MOU with SINTFF on 28th August 2008:

For cooperation in the area of Offshore Geotechnical Engineering, Hydrate remediation and Marine Structural Engineering.

2. MoU with Petronet LNG Ltd. (PLL) on 11th Sept 2008:

For jointly sourcing LNG along with setting upstream Gas liquefaction plant(s), setting up of re-gasification plant and other downstream gas ventures.

3. Agreement with Texas Engineerinc Experiment Station on 23rd Sept 2008:

Through this agreement ONGC is joining as member to the Joint Industry Programme (JIP; of ASM University, Texas, USA for Research Studies on Model Calibration and Efficient Reservoir Imaging (MCERI).

4. MOU with M/s Uranium Corporation India Limited (UCIL) on 11th Nov 2008:

For cooperation to pursue Uranium Ressource Exploration and Development.

5. MoU with Indian Oil Corporation (IOC) on 11th December 2008:

For mutual cooperation in the fields of exploration, production and marketing.

6. Heads of Agreement with SHELL Exploration Company B.V. on 31st March 2009:

For co-operation in Enhanced Oil Recovery.

7. HOA with Shell India Ltd. on 31st March 2009:

For technology solutions for increasing production from onshore aging oil-fields.

8. MOU with M/s Weatherford International, USA on 12th February 2009:

For technology induction in field optimization for increasing production and enhancing recoveries from fields operated by ONGC.

9. MoU with Ashok Leyland Project Services Ltd (ALPS) on 5th May 2009:

For sourcing of LNG on long term at a competitive price and pursuing integrated E&P and Downstream opportunities.

12. Information Technology:

Your Company became the first PSU to launch SAP powered 'e-procurement' process. Adhering to the guidelines of CVC, the process will ensure standardization of the procurement process of ONGC and will ensure transparency in the tendering process. It will also speed up procurement process. Along with this, your Company has also institutionalised centralized electronic payment system for employees and the vendors. The

system will reduce manual interventions thereby reducing delays in payments and improving transparency to the satisfaction of the stakeholders.

Your Company is also implementing Project SCADA (Supervisory Control And Data Acquisition) covering entire production and drilling facilities. The first phase of the project covering six assets has already been commissioned. Once implemented, production and drilling facilities can be monitored on 24x7 real-time basis.

13. Health, Safety & Environment (HSE):

HSE remains the core focus area of your Company. Almost all the work centres of your Company are certified with ISO 9001, OHSAS 18001 and ISO 14001. The work force in ONGC has systematically developed highest level of HSE practices through intensive and continuous training.

Your Company has undertaken Mangrove plantation at Gulf of Khambat in the Gandhar region for arresting coastal degradation. Your Company has also sponsored Ringal plantation in 120 hectares of forest land in Upper Himalayan region for environment protection.

14. Clean Development Mechanism (CDM):

Your Company has already registered four Clean Development Mechanism (CDM) project with the United Nations Framework Convention on Climate Change (UNFCCC). In addition two more projects have been validated. Your Company has joined the global initiative on Carbon Disclosure Project (CDP) besides drawing up an elaborate programme to become carbon neutral.

15. Human Resources:

You are aware that your Company has vast pool of skilled and talented professionals; the most valuable asset for the company. Your Company continued to extend several welfare benefits to its employees by way of comprehensive medical care, education, housing and social security. During the year 2008-09, your Company implemented 92 new and revised welfare policies for its employees. Fifty four employees were released under the Voluntary Retirement Scheme during the year. The Human Resource value of the employees based on 'Lev and Schwartz' model is enclosed at Annexure 'B'.

PRESIDENTIAL DIRECTIVE:

Revision of pay and allowances of Board level and below Board level executives in ONGC with effect from 01.01.2007 has been implemented as per the MoP&NG's Presidential Directive vide letter dated 24.4.2009 as per the guidelines issued by DPE in this regard (copy enclosed as per Annexure 'C').

16. Welfare Trusts:

Employees Contributory Provident Fund (ECPF) Trust, managing Provident Fund accounts of employees of your Company, has settled 4,873 cases of final withdrawals and 1,813 cases for non-refundable withdrawals during the year. The Trust has initiated e-payments to its members.

Post Retirement Benefit Scheme (PRBS) Trust of your Company, set up to provide financial security to superannuating employees, settled 662 cases

of pensionary benefits and 309 cases of withdrawal benefits during the year.

The Composite Social Security Scheme (CSSS) formulated by your Company provides an assured ex-gratia payment in the event of unfortunate death or permanent disability of an employee in service. Families of the deceased employees get financial assistance under the scheme ranging from Rs.1.5 million to Rs 2.0 million. During the year, CSSS Trust has settled 118 cases for death/permanent total disability and 949 cases for survival benefit refund cases.

Gratuity Fund Trust, created for payment of gratuity with provisions of 'Gratuity Rules', settled 868 cases during the year 2008-09.

ONGC Sahayog Trust has been created for welfare of secondary workforce or their heirs, who are in financial distress. Approximately, Rs. 5.2 million was disbursed during the year amongst 105 beneficiaries.

Your Company implemented the Employees Pension Scheme (EPS-1995) retrospectively w.e.f 16th November 1995 and remitted Rs. 207.60 million as employer's contribution during the year.

Your Company complies with the Government guidelines on reservations for SC and ST. The percentage of SC and ST employees as on 1st April 2009 was 15.82% and 8.44 % respectively. During the year 2008-09, over Rs. 20 million was spent for welfare of the priority communities.

17. Industrial Relations:

During the year, your Company faced the distabilising situation of agitation programmes by OSGWASTO over the issue of pay revision of Oil Sector Officers. The hardline approach by the agitators culminated into strike for 3 days from 07.01.2009 to 09.01.2009 all across oil PSUs. Operations at ONGC were also disrupted at all work centres. A total of 418,123 man hours were lost during the strike and net monetary loss incurred by the company on account of strike was approx. Rs.1,310 million.

Disciplinary Action was taken and a penalty of 'Removal from service' was imposed on 64 ASTO representatives. Subsequently based upon the appeals preferred by these executives it was decided by the Board of Directors of your Company to set aside the order of penalty in respect of all of 64 executives and to remit the case to the Disciplinary Authority with the direction to complete the necessary disciplinary action under ONGC CDA Rules. Such action under the SDA rules is in process. Except for this disruptive action by ASTO leadership, harmonious industrial relations were maintained all over the company.

18. Grievance Management System:

Your Company provides an easily accessible mechanism to the employees for redressal of their grievances, either through informal channel or through formal channel. All key executives of your Company have designated a publicized time slot thrice a week to meet public representatives for speedy redressal of their grievances.

Your Company has also approved creation of a 'single window front office' at all work-centres. An officer not below Chief Manager level is responsible for ensuring accessibility and responsiveness to public

grievances.

19. Right to Information Act, 2005 (RTI ACT):

An elaborate mechanism has been set up throughout the organisation to deal with the requests received under the RTI Act, 2005. There were 24 applications pending as on 1st April 2008 and 510 applications were received during the year. Out of the above, information was provided to 438 applicants, 6 cases were transferred to other public authorities and 90 requests have been rejected. In addition, 19 appeals were filed before CIC.

20. Implementation of Official Language Policy:

Your Company makes concerted effort to spread and promote Official Language. The first Hindi e-Magazine 'Sahastradhara' was launched during the year.

21. Human Resource Development:

Several HRD initiatives were taken like HR Audit, Coaching & Mentoring, Business Games, Advanced & Senior Management programmes for senior officers.

During the year, ONGC Academy conducted 244 training programmes for 7,561 executives (130,252 training days). The Regional Training Institutes conducted training for 4,766 non-executives (16,594 mandays).

22. Accolades:

Consistent with the trend in preceding years, your company, various operating units, and its senior management officials have been in receipt of various awards and recognitions.

The details of such awards and recognitions to your Company are placed at Annexure 'D'.

23. Sports:

Around 195 sportspersons, including 122 international level performers, represent your Company in 15 different games. Your Company supported the All India Football Federation (AIFF) to revive the India-League 2008 (formerly known as National Football League).

ONGCians, World Billiard champion Pankaj Advani was conferred with Padmashri award by the President of India and athlete Ms. Chitra K Soman was conferred with Arjuna Award in recognition to their achievements in the respective fields. Arjuna Awardee Virendra Sehwag became the fastest Indian Centurion in one day internationals with a century in just 60 balls.

Your Company won the Petroleum Minister's PSPB Trophy for overall best performance in 2008-09 for the sixth year in succession.

24. Women Empowerment:

Women employees constituted about 6.4 % of ONGC's work force. Various programmes for empowerment and development, including programme on gender sensitisation were organised.

25. Corporate Social Responsibility (CSR):

ONGC is spearheading the United Nations Global Compact - World's biggest corporate citizenship initiative to bring Industry, UN bodies, NGOs, Civil societies and corporateon the same platform. During the year, your Company has undertaken various CSR projects at its work centres and Corporate level.

26. Directors' Responsibility Statement:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at 31.03.2009 and of the profit of the Company for the year ended on that date;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) The Directors have prepared the annual accounts of the Company on a 'going concern' basis.

27. Corporate Governance:

In terms of Clause 49 of the Listing Agreement, a report on Corporate Governance for the year ended 31.03.2009, supported by a certificate from the Company's Auditors confirming compliance of conditions, forms part of this Report.

Your Company, acknowledging its corporate responsibility, has voluntarily obtained a 'Secretarial Audit Report' for the financial year ended 31.03.2009 from M/s A.N. Kukreja & Co., Company Secretaries in whole-time practice, which is annexed to this Report.

In line with global practices, your Company has made all information, required by investors, available on the Company's corporate website www.ongcindia.com.

28. Management Discussion and Analysis Report:

In terms of Clause 49 (IV) (F) of the Listing Agreement with the Stock Exchanges, a Management Discussion and Analysis Report has been included and forms part of the Annual Report of the Company.

29. Statutory Disclosures:

Section 274(1)(g) of the Companies Act, 1956 is not applicable to the

Government Companies. Your Directors have made necessary disclosures, as required under various provisions of the Act and Clause 49 of the Listing Agreement. Information with regard to employees as required by Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended is attached to this report.

30. Energy Conservation:

The information required under Section 217(1 )(e) of the Act read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, as amended is annexed as Annexure - 'E'.

31. Auditors:

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s PSD & Associates, M/s. Padmanabhan Ramani & Ramanujam, M/s Singhi & Co., M/s Kalyaniwalla & Mistry and M/s Arun K. Agarwai & Associates, Chartered Accountants were appointed as joint Statutory Auditors for the financial year 2008-09. The remuneration of the Statutory Auditors has been increased to Rs. 87.50 Lakh plus applicable service tax for 2008-09 for the Annual Audit assignments to be shared equally by five joint statutory auditors and actual travelling & out of pocket expenses. Further a fee of Rs.40,000/- for each Block plus applicable service tax for 2008-09 is being paid to the Statutory Auditor for certification of the accounts of Joint Venture/ NELP Block falling under the region for which they conduct the audit and actual travelling and out of pocket expenses.

The comments of the C&AG form part of this Report as Annexure - 'F'. There is no qualification in the Auditors' Report and there are no supplementary comments by C&AG under section 619(4) of the Companies Act, 1956. Notes to the Accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further comments.

32. Cost Audit:

Pursuant to the direction of the Central Government for Audit of Cost Accounts, your Company appointed Cost Accountants, for auditing the cost accounts of your Company for the year ended 31st March, 2009.

33. Directors:

During the year under report, Shri NX Mitra, Director (Offshore) retired on reaching the age of superannuation on 31st January, 2009. Shri Sudhir Vasudeva took over the charge of the office of Director (Offshore) on 1st February, 2009.

Smt L.M. Vas, Addl. Secy, DEA, MoF was nominated as a Government Director in place of Smt Sindhushree Khullar on 16th December, 2008.

Smt. Chanda Kochhar, Shri S.S. Rajsekar, Shri S. Balachandran and Shri Santosh Nautiyal were appointed as non-official part-time Independent Directors on the Board of ONGC on 11th November, 2008 and Ms. Anita Das was appointed as non-official part time Independent Director on 5th August, 2009.

The tenure of Dr. R.K. Pachauri, Dr. Bakul H Dholakia, Shri V P Singh and Shri P K Choudhury concluded on 25th June, 2009. Upon her nomination as

Managing Director of ICICI Bank Ltd., Smt Chanda Kochhar submitted her resignation from the Board of ONGC effectivce 24th June, 2009, which was accepted by your Board.

Your directors place on record their deep appreciation of the valuable contributions made by Dr. R K Pachauri, Dr. Bakul H Dholakia, Shri V P Singh, Shri P K Choudhury, Shri N K Mitra, Smt Sindhushree Khullar and Smt. Chanda Kochhar, during their respective tenures. Your Company is pursuing with the Government of India for appointment of Independent Directors against these vacancies.

Pursuant to the provisions of Section 255 & 256 of the Companies Act, 1956 and Clause 104(1) of Articles of Association of the Company, Dr. A.K.Balyan and Shri U N Bose retire by rotation at this AGM and being eligible offer themselves for reappointment.

Shri S S Rajsekar, Shri S Balachandran, Shri Santosh Nautiyal, Smt L M Vas, Ms. Anita Das and Shri Sudhir Vasudeva, Director (Offshore) who were appointed as Additional Directors after the last Annual General Meeting, hold office up to the 16th Annual General Meeting. The Company has received notices in writing from the members pursuant to the provisions of Section 257 of the Companies Act, 1956, proposing their candidature for appointment as Directors of the Company, liable to retire by rotation.

Brief resume of the Directors seeking Appointment / Re-appointment, together with the nature of their expertise in specific functional areas and names of the companies in which they hold the directorship, number of shares held and the membership/ chairmanship of committees of the Board, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges are given in the notice convening the 16th Annual General Meeting of the Company, and form part of the Annual Report.

34. Acknowledgement:

Your Directors are grateful for all the help, guidance and support received from the Ministry of Petroleum and Natural Gas, Ministry of Finance, the Reserve Bank of India and other agencies in Central and State Governments. Your Directors acknowledge the constructive suggestions received from Statutory Auditors and Comptroller & Auditor General of India and are grateful for their continued support and cooperation.

Your Directors thank all share-owners, business partners and members of the ONGC Family for their faith, trust and confidence reposed in ONGC.

Your Directors wish to place on record their sincere appreciation for the unstinting efforts and dedicated contributions put in by the ONGCians at all levels, to ensure that the company continues to grow and excel.

On behalf of the Board of Directors

Place: New Delhi (R.S. Sharma)Date : 6th August, 2009 Chairman and Managing Director

Annexure-A

Statement of Reserve Recognition Accounting:

Standardised measure of Discounted Future Net Cash Flows relating to Proved

Oil and Gas Reserve quantities as on 31st March, 2009.

(Rs. in million)Particulars Gross Value as at Present value (Discounted at 10%) as at31st March 31st March 31st March 31st March 2009 2008 2009 2008Revenues:

Oil 7020106.35 6596884.02 3424402.41 3060469.75

Gas 1214415.98 1122791.68 612658.72 490299.24

Total Revenues 8234522.33 7719675.70 4037061.13 3550768.99

Costs:

Operating, Selling & General 3408278.12 3096451.55 1671945.92 1422352.50

Corporate Tax 987826.53 1030614.89 478461.15 474884.82

Sub Total 4396104.65 4127066.44 2150407.07 1897237.32

Evaluated Cost of Acquisition of Assets, Development and Abandonment:

a) Assets 671575.40 755244.21 400951.79 406247.75

b) Development 357388.54 261147.83 244656.30 167629.32

c) Abandonment 160089.70 149457.70 2281.93 1936.71

Sub Total 1189053.64 1165849.79 647890.02 575813.78

Total Cost 5585158.29 5292916.23 2798297.09 2473051.10

Net future earnings from Proved Reserves 2649364.04 2426759.47 1238764.04 1077717.89

Notes:

1) The Revenues on account of crude oil and gas have been worked out on the basis of average price for the year 2008-09. The average price for crude oil is net of Subsidy Discount.

2) Expenditure on Development, Acquisition of capital assets, Abandonment costs and Operating Expenditure have been considered at current costs i.e as on on 31.03.2009. Taxes and Levies have been considered at prevailing rates as on 31.03.2009.

3) The reserves have been estimated by ONGC's Reserve Estimates Committee following the standard international reservoir engineering practices.

4) Only Proved reserves have been considered. Probable or Possible reserves

have not been considered. These reserves exclude ONGC's share of foreign JV Assets.

5) Both revenues and costs have been discounted to present value using 10% discounting factor. The Net future earnings, therefore, represent the net expected future cash inflows from production of recoverable reserves of crude oil and gas.

6) However, neither the estimated net reserves nor the related present value should be taken as a forecast of future cash flows or value of these reserves because (a) future estimated production schedules used in the valuation process are subject to change, (b) up-gradation of Probable and Possible reserves would significantly affect the gross and net present value of the expected future cash inflows, (c) future crude oil and natural gas prices are subject to change and (d) future expenditure on production (operating), development, acquisition cost of capital assets, abandonment costs and rates of taxes and levies, which may be at variance from those assumed herein.

Annexure-B

Human Resource Value:

Employees as on 31st March, 2009

Employee Group Age Distribution Total<31 31-40 41-50 51-60 2008-09 2007-08

(A) Technical:

Executive 992 1246 9166 7706 19110 18379

Non-Executive 103 603 2022 724 3452 3997

Total (A) 1095 1849 11188 8430 22562 22376

(B) Non-Technical:

Executive 182 445 1778 2429 4834 4638

Non-Executive 64 759 2606 2210 5639 5982

Total (B) 246 1204 4384 4639 10473 10620

Grand Total (A+B) 1341 3053 15572 13069 33035 32996

Note : Whole time Directors excluded.

Valuation as on 31st March, 2009.

(Rs. in million)Employee Group Age Distribution Total A B <31 31-40 41-50 51-60

(A) Technical:

Executive 24008.8 27588.8 143715.9 63451.8 258765.3 13.5 9.7

Non-Executive 1295.6 6854.4 20000.7 3676.2 31826.9 9.2 8.4

Total (A) 25304.4 34443.2 163716.6 67128.0 290592.2 12.9 9.5

(B) Non-Technical:

Executive 4211.3 9435.8 25459.0 18175.0 57281.1 11.8 8.7

Non-Executive 793.5 7784.2 20749.1 7969.1 37295.9 6.6 6.4

Total (B) 5004.8 17220.0 46208.1 26144.1 94577.0 9.0 7.4

Grand Total (A+B) 30309.2 51663.2 209924.7 93272.1 385169.2 11.7 8.8

A = Value per Employee 2008-09 B = Value per Employee 2007-08

* Valuation based on most widely used ' Lev & Schwartz' model.

* Aggregate future earnings during remaining employment period of employees, discounted @ 7% p.a., provides present valuation.

* Future earnings based on current emoluments with normal incremental profile.

Annexure- C

Presidential Directive:

No. 31018/12/2008/ONG-IIIGovernment of IndiaMinistry of Petroleum & Natural Gas

Shastri Bhawan, New Delhi. April 24,2009

ToThe Chairman & Managing DirectorONGC LimitedJeevan Bharati Building, Indira Chowk,New Delhi-110001.

Subject: Pay Revision of Board Level and Below Level Executives and Non-unionised supervisors in Central Public Sector Enterprises (CPSEs) w.e.f. 01.01.2007 - in respect of ONGC Limited.

I am directed to refer to your letters No.11(19)/09-CP dated 13th April, 2009 and 20th April, 2009 on the above subject and to say that in exercise of the powers conferred by Article 109 of Articles of Association of Oil & Natural Gas Corporation Limited (ONGC), the President is pleased to direct CMD, ONGC to implement revision of pay and allowances of Board Level and below Board Level Executives in ONGC strictly as per the guidelines contained in Department of Public Enterprises (DPE) O.Ms. No. 2/70/2008-DPE (WC) dated 26.11.2008, No.2/70/2008-DPE(WC)-GL-IV/09 dated 09.02.2009 and No. 2/70/2008-DPE (WQ-GL-VII/09 dated 02.04.2009.

2. Para 2(vi) of DPE's O.M. dated 02.04.2009 prescribes that there will be

no change in the ten pay scales of below Board Level posts as indicated in their O.M. dated 26.11.2008. The existing pay scales, including intermediary scales may, therefore, be fitted in the revised scales accordingly. However, if there is any exceptional case regarding intermediary pay scales, a detailed proposal regarding the same may be submitted to this Ministry for taking up the matter with DPE.

3. This issue with the concurrence of AS&FA vide Dy. No.395 dated 23.04.2009

Yours faithfully

Sd/-(R.S. Sikdar)Under Secretary to the Government of IndiaTel: 23384473

Annexure-D

Recognitions, Awards and Accreditations:

1. Global Rankings/Recognitions:

* Number one E&P Company in world and 25th among leading global energy majors as per Platts Top 250 Global Energy company rankings 2008; based on assets, revenues, profits and Return on Invested Capital (ROIC) (October 2008).

* Ranked 23rd among the Global publicly-listed energy companies as per 'PFC Energy 50' list (January 2009).

* Leading Indian Multinational Enterprise (MIME) as per a recent survey by the Indian School of Business, Hyderabad and the Vale Columbia Center on Sustainable International Investment (VCC) at Columbia University, New York (May 2009). Occupies 152nd rank in the Forbes Global 2000 list 2009 of the world's biggest companies (up 46 notches than last year's rank of 198th position) based on sales, profits, assets and market capitalization (April 2009).

* Only company from India to figure in the elite list of 40 global companies as per Return on Revenues (27th rank) and Return on Assets (30th rank) in the Fortune Global 500 list of 2009; with overall rank of 402. (July 2009).

2. Indian Rankings/Recognitions:

Ranked 3rd in the Business World Real 500 survey list of the Indian companies on the sum of total assets and total income of a company (October 2008).

3. Awards & Accreditations:

Secured three out of eight Petrofed Awards 2008, instituted by Petroleum Federation of India (Petrofed), for performance during 2007-08. (April 2009).

* Leading Oil & Gas Corporate of the year.

* Exploration & Production Company of the Year.

* Project Management (above Rs. 2000 Crore) - Company of the Year for the year 2008.

* Bagged all the National Mines Safety Awards (12 awards), in Oil Mine Category, for the year 2004, 2005 & 2006. (May 2008)

* Gold Trophy for 'SCOPE Meritorious Award for Good Governance 2006-2007'. (November 2008)

* Commendation for Strong Commitment, CII-ITC Sustainability Awards-2008. (December 2008)

* Maiden Golden Peacock Award for Combating Climate Change - 2008 instituted by Institute of Directors (IOD). (May 2008)

* Enterprise Excellence Award in recognition of excellent corporate performance instituted by Indian Institution of Industrial Engineers (HIE). (May 2008)

* Best Public Sector Award 2008 instituted by Public Relations Society of India (PRSI). (August 2008)

* Winner's trophy of the maiden 'Earth Care Award for excellence in climate change mitigation and adaptation' under the category of 'GHG mitigation in the small/ medium and large enterprises' instituted by Times of India and JSW foundation to recognize local and relevant actions to tackle climate change. (April 2008)

* Awarded the first Dalal Street Investment Journal (DSIJ) PSU Awards 2009 for the category Highest Profit making Enterprise for the FY 2007-08. (March 2009)

* SAP- Awards for Customer Excellence (ACE) for the year 2008 in the category Extended Supply Chain (SRM)' for implementation of reverse auction process on the SAP-SRM platform; the first PSU to successfully implement the process. (September 2008)

* Award for Excellence in Environmental Sustainability of Business 2007-08, instituted by The Federation of Indian Chambers of Commerce and Industry (FICCI). (February 2009)

* Amity Corporate Excellence Award for Dominant Leadership & Global Presence instituted by the Amity International Business School, NOIDA. (February 2009)

4. Awards to Business units:

Assam Asset:

* Greentech Safety Silver Award-2008 for two of the Surface installations of Assam; CTF-Lakwa and GCP-Rudrasagar (RDS). (April 2008)

Cauvery Asset:

* Greentech Safety Silver Award-2008 (April 2008)

* Corporate Social Responsibility Award instituted by the Tamil Nadu Government. (March 2009)

Tripura Asset:

* Greentech Safety Silver Award-2008 (September 2008)

* Fire Services, Tripura Asset received ISO: 9001:2001 certification for Quality Management System. (QMS) (September 2008)

Rajahmundry Asset:

* Greentech Safety Silver Award-2008 (September 2008).

Ahmedabad Asset:

* Greentech Safety Silver Award-2008 (September 2008).

Hazira Plant:

* Greentech Safety Gold Award-2008 for the record sixth time. (September 2008)

* Greentech Environment Excellence Award 2008. (September 2008)

* 'National Award 2008' from National Institute of Total Productive Management (November 2008).

Uran Plant:

First installation in India to be awarded Level - 7 certification under ISRS 7th edition. (February 2009).

Institute of Drilling Technology (IDT):

Golden Peacock Eco-innovation Award 2008 for development of 'Eco-friendly Defoamer'. (January 2009).

5. Awards to the individuals:

* Dr. A.K Balyan, Director (HR) took over as the National President of National Institute of Personnel Management (NIPM) for the second term. (September 2008)

* Shri D.K Pande, Director (Exploration) became the first Indian to be elected as the Vice President of the Youth and Gender Engagement Plan of the World Petroleum Congress (WPC). (July 2008)

* Shri N.K. Mitra, former Director (Offshore) was conferred with Society of Petroleum Engineers Award for Distinguished Member by President SPE International, USA. (September 2008).

* Shri D.K. Sarraf, Director (F), has been bestowed with the Best CFO award in the oil and gas sector instituted by CNBC - TV 18. (March 2009)

* Shri D.K. Pande, Director (Exploration), has been re-elected as a Director on the Board of Energistics. Energistics is a leading global provider of information and business standards for upstream oil and gas

industry. (March 2009).

Annexure- E

a. Energy conservation:

1. Energy Conservation measures taken:

* ONOC conducts Energy Audits of its oil installations every year.

* B-173A fluid diversion to dedicated separator, ODU flash drum gas diversion & Gas Lift recycling was completed on 30-11-2008 at a cost of Rs.2.6 Crore helping in reduction flaring at Neelam by about 25000M3/day.

* MINAS Plant at Uran is running on Gravity flow through 18' line thereby stopping All dewatering pumps of Surge Pond as a result there is a minimum power saving of Rs. 20 Lakh per annum.

* In Hazira plant, one Stage Blanking i.e. reduction of one Impeller in one Lean Amine Charge Pump of GSU-I was carried out. The Technical Intervention has reduced the Operating Cost of Pump without compromising process requirement. The project has been included in the CDAA Project Phase - II and process for its registration is on.

* In Hazira Plant, The Zero Gas Flaring project was registered by United Nations Framework Convention for Climate Change (UNFCCC) as CDM project on 16th May 2008.

* Creating energy conservation awareness and efficient use of energy by celebrating OGCF-09 at all the locations of ONGC and carried out different activities like cycle rally, LPG Quiz programme, quiz, drawing, slogan, essay competition, Drivers awareness programmes, workshop on energy conservation, exhibition, free pollution check up, street play etc.

* Created awareness as part of energy conservation by providing training on Energy conservation techniques to 12389 employees of ONGC at Delhi, Dehradun, Agartalla, Rajahmundry, Chennai, Karaikal, Bokaro, Kolkatta, Uran, Ahmedabad, Ankleshwar, Mehsana, Jodhpur, Sibsagar/ Nazira. It is expected that by imparting this training they can bring down the energy bills by 20%.

* New energy efficient light sources like CFL, sodium lights, T-5 Tube lights etc are fitted in place of inefficient lights at Dehradun & in Assets.

* The employees & their families are educated on 'Energy Conservation techniques' under the campaign of 'URJA UDAI'.

* Bi-Fuel kit installed in Generators in CBM Bokaro to save diesel.

* VFDs are installed at desalter plant, Ahmedabad to save the electrical energy.

* Energy in-efficient Engines D-399 & D-398 on different drilling rigs are replaced by energy efficient 3512 B Cat Engine 38 Nos & K-50 Cummins Diesel engines 31 Nos.

In addition, the following measures have also been taken:

a. Reduction of Gas Flaring:

Gas flaring in Onshore Assets has gradually been reduced from 555 MMSCM in 2001-02 to 88 MMSCM in 2008-09 by taking various measures like creating necessary infrastructure i.e. pipelines, compressors etc. direct marketing of isolated low volume arid low pressure gas and adopting innovative measures as GTW (Gas to Wire). Considering 2001-02 as the base year, these measures have resulted in meaningful utilization 467 MMSCM of gas in 2008-09 alone, in monetary terms this amounts to Rs. 149.44 Crore.

b. Clean Development Mechanism:

A large scale CPM project titled 'Flare Gas Recovery Project at Hazira Plant' was registered by the United Nations Framework Convention on Climate Change (UNFCCC). The project is estimated to earn 8,793 Certified Emission Reduction (CER) annually. With this, ONGC has four registered CDM projects in its kitty with expected annual CERs of 119, 655.

Two more CDM projects, viz 51 MW wind power project at Gujarat and Energy Efficiency in amine circulation pump at Hazira have been successfully validated during the year. The total expected CERs from these two projects will be around 91000 per annum. Two other projects are under development.

c. GHG Accounting:

ONGC has pioneered in the field of GHG accounting. This is the first step towards carbon foot printing and full fledged carbon disclosure system and the first step for attaining carbon neutrality. GHG accounting will also help ONGC in benchmarking its operations leading to energy efficiency and help develop new CDM projects. As per the plan, consultant has been engaged on 2008-09 to undertake GHG accounting for nine pilot facilities.

2. Energy Conservation measures taken earlier which are contributing to Energy saving:

Your company's proactive steps in energy conservation measures are paying off. Waste heat recovery systems, turbo-expanders, natural gas geysers are successfully running at various installations. Reduced loss of thermal energy through sustained maintenance of steam traps and inter-fuel substitutions are paying off.

3. Impact of Measures on reduction of energy consumption and consequent impact on the cost of production of the goods:

Above measures taken by your company have resulted in reduction of significant quantity of fuel consumption (HSD, Natural gas and electricity) valuing about Rs 166.63 Crore during the financial year 08-09.

B. RESEARCH AND DEVELOPMENT:

1. Patents:

a. Patent has been filed for 'Composition and method for dissolution of Strontium Sulphate scales' (No. 1752/MUM/2008 dated 19th Aug 2008), by IOGPT.

b. A Process for treatment of oily effluent produced by petroleum oil

industries (under Patent no. 209854, 7 Sep 2007) is being commercialized with its possible applications in KOCS fields.

2. Specific areas in which R&D was carried out:

ONGC along with TERI has been carrying out R&D in the field of Microbial Enhanced Oil Recovery (MEOR), Paraffin Degrading Bacteria (PDB) and Flow Assurance for the last 3-4 years. Field trials on pilot scale were conducted.

3. Benefit derived as a result of the above R&D:

MEOR has been successfully applied to enhance oil recovery from depleted oil wells of Kalol, Limbodra, North Kadi, Sobhasan, Padra and Kosamba.

PDB jobs have been carried out in various wells in Mehsana. This has resulted in reduction of scraping frequency. Scraping frequency has come down from twice a week to once in 3 months in some of the wells thereby reducing the operational cost and improving the productivity of the well.

Flow Assurance jobs are carried out in feeder and flow lines to reduce back pressure at the well head.

4. Future Plan of Action:

ONGC has formed a joint venture with TERI called ONGC TERI Biotech Ltd. (OTBL)' incorporated on 26th March, 2007. Director (Onshore) has been nominated as the Chairman of this company. The company will address the requirement of Bioremediation, Microbial Enhance Oil Recovery and prevention of wax deposition in tubular during E&P operations.

Some of the jobs undertaken by OTBL are as under:

* Contract was signed in November '08 between Mehsana Asset and OTBL for carrying out PDB jobs in 50 wells. As on 01.04.2009, the job has been carried out in 19 wells under the contract. PDB jobs have significantly reduced need of scraping, HOC etc. and the wells are flowing without interruption.

* Ahmedabad Asset has signed a contract with OTBL to do MEOR job in 50 wells along with WDP job for 80 KM flow lines.

* In addition to this OTBL has been the first company to successfully show case the effectiveness of Oilzapper technology in cleaning oil spills in Kuwait. The company is hopeful of bagging a big contract in Kuwait and this will open up business opportunities for many other upstream and downstream activities in the Middle East.

5. Technology Absorption and Adaptation:

* Long Term Technical Services by M/s Midland Valley Exploration (MVE), U.K. for Structural Modeling for carrying out projects of various sedimentary basins of India in three years period.

* IES Basin Modeling Technology for the advanced 3D Petroleum System modeling technology, with help of the PetroMod software system.

* Amplified Geochemical Imaging (AGI) by M/s GORE Associates, USA for

Amplified Geochemical Imaging (AGI). It has carried out in Canyon Play area of Cauvery Basin and Patan area of Cambay Basin.

* STAR Structural Analogues for Reservoirs, U.K. It integrates physical analogue modeling results with field examples and case studies of classical structural set ups and to create digital atlas of structural analogues and tool boxes along with 3D visualization.

* State of art automatic fission track dating system in Geochronology and fission track division from M/s Autoscan Pty. Ltd., Australia on PAC basis has been successfully installed and commissioned.

* ProbE-Global E&P database from Petroconsultant S.A.Switzerland.

* Magnetotelluric System (MT) a tool for investigation of subsurface using natural elejfitttlgnetic radiation.

* DAKS a Corporate License 'digital Analog Knowledge System' software from C&C Resevoirs, USA had been procured and installed successfully at different work centers of ONGC.

* An associate Membership of EGI University of Utah, USA, so as to have access to all the G&G information/data from EGI Global Data Base and also services form EGII.

* Fluorescence Microscope with Image Analysis System for organic petrography of sedimentary organic matter and for geochemical evaluation of petroleum source rocks.

* Automated Kerogeatron System for environmental-friendly and hazardous-free extraction of pure kerogen that helps in qualitative and quantitative evaluation of oil and gas potential in petroliferous basins.

* Linux based PC Cluster 3D Basin Modeling Workstation to port and run IES Petromod 3D software to understand and evaluation of petroleum systems.

* lon-chromatograph (Dionex-ICS 3000) to analyse cations, Cr 3+, Cr6+, Fe2+, Fe3+, fatty acids, iodide, sulphide and cyanide and other anions etc. in formation/ effluent/ surface water samples.

* Total Sulphur and Nitrogen Analyser (Multi EA-3100) for analysing total nitrogen & sulphur content in the crude oils, sediments and gases.

* GC-MS-MS with pyrolyzer: Installed advanced GC-MS-MS with pyrolyzer which enabled the GC-MS-MS analysis directly on sediment samples for detailed geochemical characterization.

* A new technique, wet sieving method for offshore sample preparation: The wet sieving method of sediment sample preparation for gas desorption studies in Offshore areas was applied during the Surface Geochemical Exploration (SGE) of NELP-IV block of Mahanadi, Andaman & Kutch-Saurashtra offshore basin.

* Precision type of AC System introduced at PC Cluster System of GEOPIC for accurate control of Ambient condition (Temp. & Humidity).

* PETREL, Schlumberger's propriety software, was successfully used for fracture prediction in Madanam Horst area of Cauvery Basin.

* Thrustline software for Imaging in thrust fold areas and complex geology terrain M/s GEOTOMO, USA.

* FASTVEL Software for Automatic RMO analysis and Picking from M/s Paradigm, Australia Petromod Basin modeling software (corporate licensing) from M/s IES, Germany.

* Kingdom Suit of software under corporate licensing (Purchased by WOES, Mumbai) from M/s SMI USA.

* DrillWorks Predict software for Pore Pressure Prediction from M/s Knowledge Systems, UK.

* Geoquest Geoframe software forG&G interpretation from M/s Schlumberger - Geoquest.

* PAN System & PANMESH softwares for Well testing from M/s EPS, UK.

* Earthcube to Geoprobe conversion software for G & G 3D visualization from M/s Halliburton, USA.

* Low Frequency Acoustic Passive Seismic DHI (IPDS): This is the technology for direct detection of hydrocarbons using low frequency acoustic waves.

* Passive Seismic Tomography: PST would provide a detailed 3-D seismic velocity and Poisson ratio model of upper few km of the crust. Careful interpretation can transfer the velocity model into a complete 3D subsurface image.

* Data Processing - PC Cluster technology Hardware and Software: From 2008-09 all the processing centers are using PC Cluster system for processing their projects. Induction of PC cluster has enhanced the computing facility of all processing centers.

* Corporate Licensing: Nodal agency GEOPIC/ CGS: Corporate Licensing of Interpretation software from M/s Hampson Russel has been implemented across ONGC. Geoframe of Schlumberger, Pan Matsh and Thrust line of GEOTOMO has been added under corporate licensing during 2008-09.

* Q Marine - Proprietary technology of M/s Western Geco International for high resolution and improved reservoir characterization and monitoring, deployed through two vessels in 06-07 and through three vessels in 2007-08. This was continued during 08-09 also and data was acquired through three vessels.

* Multi-Component Seismic Survey - 3D - 3C Multi component seismic API technology inducted through departmental crew in A&AA Basin during 2007-08. Now, six of the new data acquisition systems have been procured along with digital multi-component sensors, which are be capable of carrying out multi-component survey. 3D-3C seismic data survey is being carried out in Laplingaon area of A&AA Basin, Jorhat. The data is being acquired and processed in consultation with Dr. Garota

* Virtual Drilling: MaxEx Virtual Drilling technology is a new technique of generating logs in onshore areas, which provides information on thickness, permeability and porosity of a prospect without drilling a well, through recording of reflected natural EM waves at surface and converting them to

logs, by proprietary software.

* VSP Units - Four numbers of State-of-the-art multi component digital VSP equipment with multi-level tool have been inducted in Chennai, Baroda and Jorhat.

* New Data Acquisition System -14 new state-of-art data acquisition system with 24 bit delta sigma technology has been procured. These systems will be capable of mixed mode (Analog/ digital/ geophone/ hydrophone) operation with high channel count to facilitate seismic data acquisition in logistically difficult areas as well as in geologically complex areas with smaller bin size.

* PERISCOPE: It is Logging While Drilling (LWD) Resistivity imaging measurement used for precision placement of drain holes relative to reservoir boundaries, water detection and avoidance and refining reservoir models thereby maximising production.

* Well Shuttle Service: New Technology - 'Well Shuttle Service' to ensure log data acquisition under tougn and challenging well conditions by M/s Weatherford was introduced for the first time in ONGC. The main benefit of this services is data assurance in hostile environment and saving of valuable rig time in log data acquisition either by wireline or by TLC which some times is time consuming / unsuccessful due to severe / hostile bore hole conditions.

* Formation Pressure While Drilling (FPWD): Formation Pressure While Drilling (FPWD) is a service introduced for real time formation pressure measurements in holes regardless of rugose / rough hole conditions. This also has applications in horizontal / high angle deviated wells where recording of pressure measurements with normal tools (RFT/ MDT/ RCI etc) are very difficult. It has applications in drilling optimization to minimise cost and risk, well placement and formation evaluation.

* Formation Pressure Expresses (XPT): 'Formation Pressure Express (XPT)' is used to quickly obtain reliable formation pressure measurements in low permeability low porosity reservoirs.

* First Level-3 completion was achieved in the HZ-7 well in Neelam-Heera Asset in Mukta/Bassein (SS) and Panna pay (LS).

* First Segmented Completion carried out in the wells NLM-9-10ZH, in Neelam-Heera Asset. Horizontal well of 400m drilled and completed by segmentation.

* Special seismic image processing of 3D seismic data of Bassein field using SVIPro software of M/S FFA, UK has been carried out to identify the karst bodies around the BE, BF, BA and VW platforms and development locations were re-adjusted to minimize the drilling complications.

* Hollow Glass Spheres (HGS) technology has been implemented successfully for field trial for drilling drain holes in wells IP-11H & IP-10H on IP Platform of Mumbai High South field in Mumbai High Asset to minimize the formation damage and prevent mud loss.

* Tractor conveyance system was used in horizontal well VSEA - 3H to record USIT - CBL - VDL - GR log in 7' liner to evaluate cement bondage with casing and formation.

* Synthetic Oil-base Mud and RSS has been introduced in 2 wells ( #P1 & P6) of D1 platform and 4 wells (#2H, 7H, 9 &11) of VSEA platform in BS Asset where wells with high angle long 17 1/2 section are planned for drilling.

* For the first time in Mehsana Asset, Infrared type Hydrocarbon Gas Detection System installed for new GCP at Sobhasan.

* Ahmedabad Asset has signed a contract with TERI to do PDB job in 50 wells.

* 'Interactive Interpretation Work Station' was installed and commissioning of all Hardware completed on 30-09-08 in Ankleshwar Asset. Training on System administration and Users' training on all software modules under Category-1 completed.

* To accelerate the production from the tight reservoir and to maximize recovery Hydro-fracturing jobs in five wells in Gandhar Field [G-326 (GS-3A), G-500 (GS-12), G-515 (GS-12A), G-539 (GS-11), & G-572 (GS-4)] of Ankleshwar Asset were carried out in association with AA/s Schlumberger. In addition to this hydro-fracturing job in 2 wells (G-567 & G-555) was done with inhouse efforts.

* Assam Asset and M/s Balmer Laurie & Co. Ltd., Kolkatta entered into a contract for comprehensive job of mechanized tank sludge processing with paifettleri 6LABO process, cleaning, NDT inspection, repair and revamping of all 18 no.s of 5000m3 tank of Central Tank Farms (CTF) at Lakwa, AAoran and Geleki. 5000 m3 oil sludge processed, and processing of additional 5000 m3 oil sludge and recovery of hydrocarbon from sludge pits in progress.

* First time in Assam Asset radioactive chemicals (Tracer survey) have been injected in 3 water injector wells for water injection surveillance job in Geleki Field.

* High Volume Lift (HVL) has been installed in LK-202, and it is to be installed in 4 more wells to test the concept of HVL.

* Lowered sand screen for the first time in the asset with ingenious connection along with ERD packer to prevent sand up of wells in Rudrasagar field of Assam Asset.

* In an endeavor to upgrade reservoir data acquisition technology, 5 Electronic Memory Gauges (2 from M/s Leutert GMBH, Germany + 3 from M/s Kuster Company, USA) were commissioned for conducting reservoir field operations and carrying out pressure transient Analysis with higher degree of accuracy and precision in the gas fields of Tripura during the year.

6. Collaborative projects with Foreign Institutes/Domain Experts/MOU.

Structural Modelling Projects by M/s Midland valley Exploration:

M/s MVE has been issued LOI to carry out 'Long term consultancy services for three years on structural modeling'. The scope of work involves three year consultancy services that include training and project work in the latest version of M/S MVE software to a team of twenty executives from Basins & Institutes, in order to create domain experts in structural modeling. Besides technology transfer nine projects will be carried out along with a team of ONGC geoscientists in order to impart with the

knowledge of best practices in structural modeling.

Study of subsurface samples of Krishna-Godavari Basins with Prof. Dr. Gerta Keller, Princeton University, Princeton, USA:

As a joint collaborative project between KDMIPE Dehradun and RGL, Chennai, in association with Prof. Dr. Gerta Keller, Princeton University, Princeton, USA is under way. This study will lead to high resolution dating#d intra-basinal correlation of subsurface sections across K/T Boundary in KG Basin leading ultimately to better understanding of geological history and possible causes of mass extinctions.

Interpretation of G&G Data of Mahanadi Basin in collaboration with Mr. CD. Johnston an independent seismic interpreter & integrator from Alberta, Canada.

Interpretation and integration of all seismic and other available G&G data of Mahanadi Basin covering approx.60,000 sq.km. so as to bring out Paleogeography, defined Petroleum System and also to identify prospective areas.

Interpretation of G&G data in collaboration with Dr. Ben Law:

For the purpose of viewing and evaluating the potential of basin-centered gas accumulations and shale gas in the onshore and offshore basins of India. Mr. Anthony Beckett was engaged as an expert for drilling of High pressure, High Temperature wells in offshore areas.

RENEWABLE ENERGY DEVELOPMENTS:

ONGC 50 MW Wind Power Project at Bhuj in Gujarat:

50 MW Wind Farm Project at Motisindoli site, Village Jakhau, Distt. Kutch of Gujarat is an initiative of ONGC towards its commitment for Environment friendly and pollution free energy production through Renewable Sources using 1.5 MW machines installed at 78 meters high towers. The technology used is near maintenance free & thus the effectiveness of the project is sustainable & continuous. ONGC shall be saving an amount of Rs. 30 Crores approx. per year on electricity charges in Gujarat, considering the present purchase price of electricity. In addition to above 80% depreciation in capital cost in first year & tax holiday for 10 consecutive years during any first 15 years on the revenue earned is the added attraction. In future, when cost of power is bound to increase ONOC's profits through this project will increase proportionately.

Solar Energy Projects:

(a) 12800 LPD Solar Water Heating System installed/ added in present system at ONGC Colony & Officers club at Dehradun.

(b) Solar lights are installed at GCS Gamnewala (Rajasthan Forward Base).

6. Information Regarding Imported Technology:

Information Regarding Imported Technology (Imported during the last five years from the beginning of the Financial Year).

Technology Imported Year of

Import(ii) * 'Strata Bug' software for Bio-stratigraphy. 2005-06

* Log data processing software - GEOFRAME containing ELAN PLUS, dip-meter, image processing and interpretation package along with hardware.

* State of Art digital micro gravitymeter, Proton Precession magnetometer together with DGPS, Total station and Auto level for topographical survey to meet the requirements of precision GM survey.

* ISO Prime GC-IRMS

* Sun servers and work-stations for EPINET (Exploration & Production Information Network)

* Suit of 2D/3D Move Software of Mid land valley

* Three Numbers PC based software from Geographix.

* Geosec2D Paradigm software installed in F15K server

* Configured five sun blade 150 systems with PCI cards and installed windows XP so as to work both as workstation and PC.

* IBM P690(8CPU) Petrobank server upgraded to 32 CPU for supplementing seismic data processing

* 3 No's of Mobile Processing Units (MPU) for reducing API cycle time.

* PC based Seismic Interpretation system with matching hardware and software.

* High temperature anaerobic bio-reactor.

* Microscope with image analyser

* Refrigerated centrifuge.

* Incubated shaker

* High temperature incubator

* High precision metering pump.

* End Face grinder

(iii) * Data Station (DASTA - 720) 2006-07

* GV Isoprime Continuous Flow Isotope Ratio Mass Spectrometry (CF-IRMS)

* Varian CP3800 Natural Gas Analyzer

* GC-MS-MS (Varian)

* Latest releases of Landmark / Hampson Russell / Jason / GeoQuest Interpretation Software installed as part of regular M&S.

* Geo-Vision Centre (Virtual Reality Centre) with SGI Onyx 3900 Server (16 CPU, 64 GB RAM) installed for 3 Pipe, Curved screen, immersive volume visualization using the software from M/s Paradigm.

* Petrel Suite of Software along with Interactive Petrophysics from M/s Geo Quest Systems Installed.

* Latest release of Solaris Operating System version 10 installed and configured for future migration of Landmark Application Software.

* Netvault Backup Software for Lanfree / SAN backup installed.

* ZFS (Zeta Byte file system) was created on one SUN machine with Solaris 10 for performance evaluation with respect to existing UFS file system.

* Biglron Foundry Gigabit Ethernet switch upgraded to 120 gigabit fiber ports along with redundant power module to provide seamless gigabit network connectivity to all servers and clients throughout GEOPIC.

* EPOS3SE upgraded to RFC (Rock & Fluid Canvas)

* Q - Marine.

* Sea bed logging.

* GX Technology.

* Digital Multilevel Vertical seismic profiling (VSP).

* Air borne Electromagnetic Survey.

* Multi Transient Electro Magnetic (MTEM) technique.

* Virtual Drilling Technology.

(iv) * Rapid Solvent Extraction Unit (Soxtherm System). 2007-08

* Petrobank Master Data Store (MDS), from M/S Halliburton Offshore Services Inc.-a multi-client solution for the management of E&P technical data.

* 64 CPUs SGI ALTIX machine.

* 48 node IBM PC Cluster system with dual CPU per node equipped with Geocluster 4.1 application software of M/S CGG.

* 272 node IBM PC Cluster system with dual CPU per node equipped with OMEGA application software of M/S Western Geco

* Corporate Licensing of Interpretation software from M/s Hampson Russel, M/s Landmark, M/s Geoquest and M/s Paradigm.

* CGG Geocluster application software for processing.

* WGC Omega: application software for processing.

* StatMod MC and EarthMod FT modules added to Fugro-Jason's My Bench software suite.

* LWD / Geosteering with Laterolog tool.

* Compact combo LWD tool.

* FPWD- Formation Pressure While Drilling tool.

* 'Air Injection Laboratory' for identifying candidate reservoirs for air injection as a part of EOR efforts.

* Cluster Computing capabilities have been established, which will reduce significant run-time of various G&G applications and reservoir simulation processes.

* Four licenses for G&G modules (OpenWorks-2, SeisWorks-1 and StratWorks-1 of M/s Landmark Graphic Corporation).

* Three licenses for Reservoir Simulation (Model Builder-3 of M/s Computer Modeling Group Limited).

* PC Cluster technology, both Hardware and Software, for seismic data processing.

* 3D - 3C Multi-Component Seismic Survey.

* Four numbers of State-of-the-art multi component digital VSP equipment.

* 14 new state-of-art data acquisition system with 24 bit delta sigma technology.

(v) * Latest releases of Landmark/Hampson Russell / Jason / 2008-09GeoQuest / Paradigm / Midland Valley / GOCAD Interpretation Software installed as part of regular M&S.

* Corporate licensing of existing Petral and Geoframe suit of interpretation software from M/s Schlumberger

* Induction of Basin modeling software 'Petromod' from M/s IES Germany and pore pressure prediction software 'Drill works Predict' from M/S Knowledge systems

* Thrustline software for imaging in thrust fold areas and complex geology terrain from M/s GEOTOMO.

* FASTVEL software for automatic residual move out application from M/s PARADIGM.

* Procured two nos. of Precision Air Conditioner (18 TR & 9 TR) of Emersion make from OES M/S WIPRO Ltd.

* 125 TB and 50 TB of SATA based Storage System is being provided for PC Cluster of OMEGA and CGG Applications Software.

* Procured 100 Nos of 3592 magnetic media.

* Up gradation of Processing LAN from 100 Mbps to Gigabit LAN.

* State of the art LTO-4 Tape Library has been procured and commissioned.

* High end Workstations (22 Nos) inducted for interpretation and Processing.

* Long Term Technical Services by M/s Midland Valley Exploration (MVE), U.K. for Structural Modeling

* IES Basin Modeling Technology

* STAR Structural Analogues for Reservoirs, U.K

* State of art automatic fission track dating system in Geochronology and fission track division.

* ProbE-Global E&P database from Petroconsultant S.A.

* Magnetotelluric System (MT)

* Integrated PVT Package from M/s Chandler Engineering, Houston, USA.

B. Has the technology been fully absorbed? Yes

C. If not fully absorbed, areas where this has not taken place, reasons thereof, and future plans of action Not applicable

7. Expenditure on Research & Development:

(Rs. million)2008-09 2007-08

Capital 500.60 93.42

Recurring 1,574.44 1,753.32

Total 2,075.04 1,846.74

Total R&D Expenditure as apercentage of Total Turnover 0.32% 0.30%

8. Information on Foreign Exchange Earnings and Outgo:(Rs. million)2008-09 2007-08

Foreign Exchange Earnings 34,324.54 37,947.22

Foreign Exchange Outgo 115,602.49 74,009.98